Research Update: QIC Property Fund Rating Lowered To 'BBB+' On Revised Financial Policies; Outlook Stable

Australia-based QIC Property Fund (QPF) revised its target gearing (net debt to assets) range to 30%-40% from 10%-20% after receiving unitholder approval of its restructure and liquidity plan. We believe the increased target gearing range will weaken the financial risk profile of the fund when acquisitions, developments, or asset enhancement projects are funded by incremental drawn debt. On July 7, 2022, S&P Global Ratings lowered the issuer credit rating on QPF to 'BBB+' from 'A' and removed the rating from CreditWatch with negative implications, where it was placed on May 27, 2022. The stable outlook reflects our expectation that the fund will maintain a disciplined approach to its growth strategy, consistent with its revised financial policies. It also reflects our

...- Australia-based QIC Property Fund (QPF) revised its target gearing (net debt to assets) range to 30%-40% from 10%-20% after receiving unitholder approval of its restructure and liquidity plan. - We believe the increased target gearing range will weaken the financial risk profile of the fund when acquisitions, developments, or asset enhancement projects are funded by incremental drawn debt. - On July 7, 2022, S&P Global Ratings lowered the issuer credit rating on QPF to '###+' from 'A' and removed the rating from CreditWatch with negative implications, where it was placed on May 27, 2022. - The stable outlook reflects our expectation that the fund will maintain a disciplined approach to its growth strategy, consistent with its revised financial policies. It also reflects our view that QPF has headroom at the '###+' rating level to undertake development and asset enhancement projects that would enhance the quality of its asset portfolio....

Research Update